COMMISSIONER OF INCOME-TAX vs. SYNBIOTOCS LIMITED

ITR/34/1998HC GujaratGJHC24024392199816 April 2008Author: HONOURABLE MR. JUSTICE D.A.MEHTA,HONOURABLE MR. JUSTICE Z.K.SAIYED4 pages
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What were the facts?

This judgment concerns Income Tax Reference No. 34 of 1998 before the High Court of Gujarat. It consolidates two reference applications filed by the Revenue and two by the assessee, all pertaining to Assessment Year 1982-83. The Tribunal had referred questions at the instance of the assessee, rejecting the Revenue's reference applications. The High Court noted that the referred questions were concluded by its prior decisions. The dispute involved a liability of Rs. 2,26,76,217/- under the Drugs (Price Control) Order, 1979, and interest charged under Section 215 of the Income Tax Act, 1961. Another issue concerned a guarantee commission of Rs. 86,682/-.

What did the High Court hold?

The High Court answered the referred questions based on its previous judgments. For Question 1, concerning the liability under the Drugs (Price Control) Order, 1979, the Court referred to its decision in the assessee's own case for Assessment Year 1981-82 (SYNBIOTICS LTD. V/s. COMMISSIONER OF INCOME-TAX, (2007) 288 ITR 572 (Guj)). Following that precedent, Question 1 was answered in the affirmative, in favour of the Revenue and against the assessee. For Question 2, regarding interest under Section 215, the Court relied on its decision in SARABHAI CHEMICALS PVT. LTD. V/s. COMMISSIONER OF INCOME-TAX, (2002) 257 ITR 355, which held that the Tribunal was not justified in holding that interest under Section 215 was not chargeable. Thus, Question 2 was also answered in the affirmative, in favour of the Revenue and against the assessee. For Question 3, concerning the guarantee commission, the Court again referred to its judgment in the assessee's own case for Assessment Year 1981-82 (SYNBIOTICS LTD. (supra)), where it had reversed the Tribunal's view. Therefore, Question 3 was answered in the negative, in favour of the assessee and against the Revenue. The references were disposed of accordingly, with no order as to costs.

What were the issues?

1. Whether, on the facts and in the circumstances, the Tribunal was right in law in rejecting the assessee's claim for a liability of Rs. 2,26,76,217/- arising under the Drugs (Price Control) Order, 1979, considering that the addition of this amount as notional income was not upheld and the assessee's claim for liability would become alive if the revenue challenged the deletion? (Question of law). 2. Whether, on the facts and in the circumstances, the Tribunal was justified in law in holding that interest under Section 215 of the Act was rightly charged, even when the assessee could not anticipate the addition of notional income and the disallowance of statutory liability under the Drugs (Price Control) Order, 1979? (Question of mixed law and fact). 3. Whether, on the facts and in the circumstances, the Tribunal was right in law in holding that the amount of Rs. 86,682/- as guarantee commission was on capital account and disallowable as such? (Question of law). Assessee's contentions: Not recorded. Revenue's contentions: Not recorded. The judgment states it is a common ground that the referred questions stand concluded by prior decisions of the High Court.

Which sections of the Income-tax Act were involved?

Section 215

AI-generated summary — verify with the full judgment below

ITR/34/1998 1/4 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No. 34 of 1998 For Approval and Signature: HONOURABLE MR. JUSTICE D.A.MEHTA HONOURABLE MR. JUSTICE Z.K.SAIYED

1.

Whether Reporters of Local Papers may be allowed to see the judgment ?

2.

To be referred to the Reporter or not ?

3.

Whether Their Lordships wish to see the fair copy of the Judgment ?

4.

Whether this case involves a substantial question of law as to the interpretation

of the constitution of India, 1950 or any order made thereunder ?

5.

Whether it is to be circulated to the Civil Judge ? ========================================================= COMMISSIONER OF INCOME-TAX - Applicant(s) Versus SYNBIOTOCS LIMITED - Respondent(s) ========================================================= Appearance : MR MANISH R BHATT for Applicant(s) : 1, MR RK PATEL for Respondent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE D.A.MEHTA and HONOURABLE MR.JUSTICE Z.K.SAIYED Date : 16/04/2008 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE D.A.MEHTA)

ITR/34/1998 2/4 JUDGMENT

1.

The statement of case forwarded

The order continues below.

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